## Facts

- Michael A. Tougher, Jr. worked as an electronic technician for the Federal Aviation Agency (FAA) on Wake Island during 1963–1964.
- The FAA required employees to live on Wake Island in FAA housing as a condition of employment; the Toughers paid rent via payroll deduction.
- Tougher worked a normal 48-hour week but was on call 24 hours a day, averaging about 54 hours per week due to frequent after-hours calls.
- The FAA operated a mess hall where meals were available to employees free or at reduced prices.
- The Toughers instead primarily ate at home and bought groceries and other supplies for family use from an FAA-operated commissary.
- On their joint returns for 1963 and 1964, the Toughers excluded from gross income the amounts spent at the commissary, treating them as the value of employer-furnished meals under I.R.C. § 119.
- The Commissioner determined deficiencies for 1963 and 1964, disallowing the claimed exclusion.

## Issues

1. Whether the cost of groceries and supplies purchased by an employee at an employer-operated commissary, and consumed at home by choice, is excludable from gross income as “meals furnished” by the employer under I.R.C. § 119.

## Decision

- The Tax Court upheld the deficiencies and entered decision for the Commissioner.
- The court held that commissary grocery purchases were not “meals furnished” by the employer within the meaning of § 119.
- The court concluded § 119 applies to meals furnished in kind on the employer’s business premises, not to employee purchases of groceries for home consumption.
- The Ninth Circuit later affirmed per curiam on the Tax Court’s rationale.

## Legal Principles

- I.R.C. § 119 excludes the value of meals only when the employer furnishes meals in kind, for the employer’s convenience, on the employer’s business premises.
- An employee’s decision to buy groceries (even at an employer commissary) and prepare meals at home does not convert those expenditures into excludable employer-furnished meals.
- Meeting other § 119-related conditions (such as required residence or demanding on-call duties) does not eliminate the threshold requirement that meals be furnished in kind by the employer.
- Grocery costs for family consumption are personal living expenses unless a specific statutory exclusion applies.

## Conclusion

The Tax Court held that § 119 did not permit the exclusion of an employee’s commissary grocery purchases because the employer did not furnish meals in kind on its business premises; the expenditures were personal living costs and therefore taxable.


Tougher v. Commissioner, 51 T.C. 737 (1969)